That didn't last long.
After starting the year as one of the strongest stocks in the S&P 500, General Electric Co. (GE - Get Report) is back in the red. Shares of the $141 billion conglomerate are down about 7% year-to-date, vs. a 5% rally in the rest of the S&P 500. That's some brutal underperformance during a stretch when most stocks have been "working."
But it's nothing new for GE, a stock that's shed more than 46% of its market value in the trailing 12 months. The mean reversion to positive territory is over in GE at this point -- shares are back in their downtrend.
And the problem for GE bulls is that shares could have even further to fall from here after crossing a key level last week.
To figure out how to trade it (or not trade it), we're turning to the chart for a technical look.
At a glance, it's hard to miss GE's technical trajectory. The price action has been incredibly straightforward for the past year:
GE's selloff has been in the context of a parabolic downtrend. Simply put, every test of the trendline resistance level that's defined the top of the trading range for GE has been followed up with a strong selloff lower.
Things changed a bit back in the fall, when GE consolidated sideways just above the $17.50 level. That price level acted like a "do-not-cross line" for GE's share price -- in other words, it was buyers' last stand. And that $17.50 got materially violated last week, clearing the way for more downside in GE ahead.
Relative strength, the side-indicator down at the bottom of GE's chart, adds some extra evidence toward the continued downside in GE. Our relative strength gauge has been making a series of lower highs all year long, confirming that GE is systematically underperforming the rest of the broad market at this moment.
Simply put, until GE can break free of that downtrend in relative strength, shares are statistically predisposed to keep on underperforming.
Make no mistake, GE makes some great products. It's not a bad company -- but it's absolutely a bad stock right now. There's no nuance there. GE's bearish price trajectory has been crystal clear for months. It makes sense to steer clear until this technical trajectory reverses course, a criterion that's pretty far away at this point.
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